Reforming the EU Civil Liability Framework Applicable to Artificial Intelligence and Other Emerging Digital Technologies: Defective Products—the Revised Product Liability Directive

This chapter discusses in detail the European Commission’s proposal for a new Directive on liability of defective products, which will revise, repeal, and replace the existing Product Liability Directive (the ‘proposal for a revised Product Liability Directive’). It identifies the main problems affecting the current Product Liability Directive (PLD), namely: (i) certain products, economic actors and damage in the digital and circular economy escape strict (i.e., no-fault) liability; (ii) difficulties related to the burden of proof in the case of complex products—consumers face obstacles to getting compensation. Whereas victims do not have to prove fault (producers bear liability irrespective of fault), proving defectiveness and causal link with damage is very difficult and costly for complex products; (iii) liability claims are subject to a number of restrictions (claimants face time limits and thresholds that might disproportionately restrict the number of claims). The aim of the revised PLD is to address the aforementioned shortcomings and modernise the current EU’s product liability regime, based on the strict liability of manufacturers, for the compensation of personal injury, damage to property or data loss caused by unsafe products. This chapter compares the Commission’s proposal with the Council of the EU’s “compromise” proposal (general approach) and closely examines the position of the European Parliament. Additionally, it covers in detail the provisional (political) agreement reached on 14 December 2023 and the final text of the revised Product Liability Directive (March 2024). It is argued that, although the revised PLD appears poised to tip the scales further in favor of claimants, particularly in complex cases, thus increasing the likelihood of manufacturers/producers facing considerable litigation risks, including the heightened risk of third-party litigation funding, it ultimately succeeds in establishing an EU product liability framework that: (i) ensures liability rules reflect the nature and risks of products in the digital age and circular economy, (ii) supports businesses bringing safe, AI-enabled and other innovative products to market, (iii) ensures that consumers’ health and property are afforded a high level of protection, (iv) reduces disproportionate obstacles to obtaining compensation, and (v) strikes an appropriate balance between the interests of claimants and defendants in Member State courts.